Understanding and optimizing Product Return on Investment (ROI) is more crucial than ever. The first installment of Dragonboat’s mini-series “Measuring Product ROI” shed light on this subject, featuring insights from Sridhar Nagarajan, our Chief Customer Officer.
What is Product ROI?
Product ROI is the quantifiable return generated by a product relative to the cost of developing and marketing it. It’s a critical metric for CPOs and product teams because it helps them showcase product outcomes to their peers and in the boardroom, making it easier to justify investments and decisions.
Sridhar emphasized that Product ROI goes beyond mere financial metrics. By examining how effectively a product organization uses resources to achieve business goals, we get a clearer picture of its ROI. This approach helps clarify the product’s contribution to the company’s success, making it easier for everyone to see its value.
In a landscape where less than 30% of product investments directly connect to revenue, leaders are likely to struggle to demonstrate the value of these investments to the broader organization and its stakeholders.
“Less than 30% of product investment and resources directly connect to revenue. That’s saying something.”
– Sridhar Nagarajan, CCO of Dragonboat
Why is Product ROI important now?
Current market dynamics require product leaders to adapt strategy quickly and ensure that execution is flawless. This increased need for agility means that the impact of product investments on ROI must be visible for the organization to react optimally to market signals.
Enhancing ROI becomes imperative for sustaining growth and competitiveness. Sridhar underscored the urgency of optimizing ROI for product teams: “It’s not just important, but critical, in today’s market to balance speed with operational control.”
In an era where the pace of strategic shifts has accelerated, Sridhar underscored the critical importance of transparently communicating these changes across the organization. Failure to do so invites a disconnect between strategy formulation and its execution, resulting in operational inefficiencies, scattered focus, and, most critically, reduced Product ROI.
ROI: The Power of a Mature Product Operating Model
The Product Operating Model is a framework designed to optimize product ROI. This model involves aligning product strategy, product discovery, and product delivery to translate business and product strategies into actionable outcomes. It sets principles, culture, and values that guide the product team’s operations towards common goals. The model has been endorsed by industry influencers like Marty Cagan and Melissa Perri. Even consultancy giant McKinsey has concluded that having a mature product operating model is strongly correlated with business performance outcomes, with 38% higher customer engagement and 37% higher brand awareness.
Aligning multiple stakeholders across the organization is a significant challenge in operationalizing ROI because each stakeholder group, from executives to product managers and engineering teams, may have different contexts, cadences, and workflows. Thus, to maximize product ROI, Sridhar urges leaders to implement and maintain the Product Operating model.
Dragonboat in Action: from 80% ROI Gains to Lightning-Fast Launches
Dragonboat’s platform uniquely connects product ROI with resource allocation and allows for the measurement of business outcomes against product roadmap deliverables.
As the CCO, Sridhar was uniquely positioned to illustrate the transformative power of optimizing Product ROI with Dragonboat. A logistics company, for instance, managed to cut out 80% of non-ROI-generating work by implementing a product portfolio management framework. In another striking example, US Bank’s Buy Now, Pay Later product line launched a fully operational product in just nine months through the strategic adoption of a product operating model facilitated by Dragonboat.
75% Ready to ROI Boost with Product Operating Models in the Next Year
Shifting the focus to the audience, Sridhar was eager to understand their plans for applying the webinar’s insights in practice. Through interactive polls, attendees expressed a significant interest in evolving their product management strategies soon. Over 75% of the participants revealed intentions to adopt or improve their product operating frameworks within the coming year, acknowledging the importance of a systematic method to boost product ROI.
Join the Movement
As we continue to explore the depths of Product ROI in this mini-series, we invite the product community to engage, learn, and grow with us. The forthcoming sessions promise even deeper dives into measuring ROI and fostering cross-functional collaboration to achieve unparalleled product success.
We look forward to welcoming you to Part 2 of this mini-series, as we learn various techniques to quantify Product ROI from Denise Hemke, CPO of Neogov.
